Samenvatting Purchasing and supply chain management
What is purchasing?
- The management of a firms external resources
- Ensuring the supply of goods, services, knowledge and capabilities.
- To perform the firms primary and support activities
Purchasing today
- From administrative to strategic function
- From buying materials/ parts to buying competence
- From cost focus to performance focus
What is supply chain management
- The management of upstream and downstream relations with suppliers and customers to deliver
superior customer value at less costs to the SC as a whole
Purchasing and supply chain management both engage with certain key concepts such as
- Relations between organizations
- Management of activities
- Aiming for performance
Outsourcing: transferring activities to external
suppliers.
Why outsourcing? (make or buy decisions)
- Decrease production costs by searching for low
cost countries.
- Access to good quality suppliers
- Gain access to markets/ circumvent trade barriers
- Etc.
- Technological innovation companies cannot do everything themselves anymore
Consequences of outsourcing:
- Companies become heavily dependent on performance of suppliers. need for good supplier
relationships.
Global sourcing: more advanced stage and
tends to imply an integration and coordination of
sourcing strategies on a worldwide scale.
International sourcing: implies buying from a
foreign supplier on an ad hoc basis.
4 dimensions of global purchasing strategy
1. Purchasing process configuration
2. Standardization of global purchasing
process
3. Standardization of product related characteristics
4. standardization of personnel related characteristics
Three main theories for the make or buy decision
- Transaction cost economics (TCE)
- Resourced based view (RBV)
, - Interaction approach
Transaction cost theory
Decision based on minimization of transaction costs. There are two criteria
- Asset specificity: extent to which assets are unique to a specific task.
- Potential for opportunistic behaviour and related costs for reducing uncertainty
Transaction costs: the cost incurred in making any economic exchange for instance when buying or selling
goods and services, gathering market information such as price, invoicing and payment writing a contract etc.
High costs make
Low costs buy
Resource based view
Unique sources of sustained (long term) competitive advantage
- Skills, resources, activities
Core competencies
- Deliver customer value
- Differentiate firm form competitors
- Can potentially be extended and developed
- Have the following characteristics/ criteria (VRIN)
Valuable: a resource adds value by enabling a firm to exploit opportunities or defend against
threats.
Rare: resources that can only be acquired by one or a few companies.
Inimitable: costly to copy
Non-substitutable: competitors cannot find alternative ways to gain the benefits that a
resource provides.
Make or buy? the closer the core, the more important to keep in house
Dynamic capabilities are defined as the ability to integrate, build and reconfigure internal and external processes
and competences to address a rapidly changing environment, where the ability to maintain and adapt these
capabilities is the basis of competitive advantage.
Extended resource based view: structure and function of a relationship relates to the specificity of resources to
be transferred. Strategic resources beyond the boundaries of the firm can be accessed especially given the
existence of certain types of inter firm relationships.
Natural resourced based view: a focus on the natural
environment, especially sustainable development and
pollution prevention. Accumulating resources for sustainable
development.
Interaction approach: emphasizes that although it is
important to protect internal strategic resources, it is
necessary for companies to access important resources
through external relationships with other companies.
Sustainability: using resources to meet the needs of the
present without compromising the ability of future generations
to meet their own needs
Triple bottom line
- Profit (economic)
- People (social)
- Planet (environmental)
Why do firms engage in sustainability
Political
- Legal demands
What is purchasing?
- The management of a firms external resources
- Ensuring the supply of goods, services, knowledge and capabilities.
- To perform the firms primary and support activities
Purchasing today
- From administrative to strategic function
- From buying materials/ parts to buying competence
- From cost focus to performance focus
What is supply chain management
- The management of upstream and downstream relations with suppliers and customers to deliver
superior customer value at less costs to the SC as a whole
Purchasing and supply chain management both engage with certain key concepts such as
- Relations between organizations
- Management of activities
- Aiming for performance
Outsourcing: transferring activities to external
suppliers.
Why outsourcing? (make or buy decisions)
- Decrease production costs by searching for low
cost countries.
- Access to good quality suppliers
- Gain access to markets/ circumvent trade barriers
- Etc.
- Technological innovation companies cannot do everything themselves anymore
Consequences of outsourcing:
- Companies become heavily dependent on performance of suppliers. need for good supplier
relationships.
Global sourcing: more advanced stage and
tends to imply an integration and coordination of
sourcing strategies on a worldwide scale.
International sourcing: implies buying from a
foreign supplier on an ad hoc basis.
4 dimensions of global purchasing strategy
1. Purchasing process configuration
2. Standardization of global purchasing
process
3. Standardization of product related characteristics
4. standardization of personnel related characteristics
Three main theories for the make or buy decision
- Transaction cost economics (TCE)
- Resourced based view (RBV)
, - Interaction approach
Transaction cost theory
Decision based on minimization of transaction costs. There are two criteria
- Asset specificity: extent to which assets are unique to a specific task.
- Potential for opportunistic behaviour and related costs for reducing uncertainty
Transaction costs: the cost incurred in making any economic exchange for instance when buying or selling
goods and services, gathering market information such as price, invoicing and payment writing a contract etc.
High costs make
Low costs buy
Resource based view
Unique sources of sustained (long term) competitive advantage
- Skills, resources, activities
Core competencies
- Deliver customer value
- Differentiate firm form competitors
- Can potentially be extended and developed
- Have the following characteristics/ criteria (VRIN)
Valuable: a resource adds value by enabling a firm to exploit opportunities or defend against
threats.
Rare: resources that can only be acquired by one or a few companies.
Inimitable: costly to copy
Non-substitutable: competitors cannot find alternative ways to gain the benefits that a
resource provides.
Make or buy? the closer the core, the more important to keep in house
Dynamic capabilities are defined as the ability to integrate, build and reconfigure internal and external processes
and competences to address a rapidly changing environment, where the ability to maintain and adapt these
capabilities is the basis of competitive advantage.
Extended resource based view: structure and function of a relationship relates to the specificity of resources to
be transferred. Strategic resources beyond the boundaries of the firm can be accessed especially given the
existence of certain types of inter firm relationships.
Natural resourced based view: a focus on the natural
environment, especially sustainable development and
pollution prevention. Accumulating resources for sustainable
development.
Interaction approach: emphasizes that although it is
important to protect internal strategic resources, it is
necessary for companies to access important resources
through external relationships with other companies.
Sustainability: using resources to meet the needs of the
present without compromising the ability of future generations
to meet their own needs
Triple bottom line
- Profit (economic)
- People (social)
- Planet (environmental)
Why do firms engage in sustainability
Political
- Legal demands
